Simple English definitions for legal terms
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Term: LBO
Definition: LBO stands for leveraged buyout. This means when a company is bought using a lot of borrowed money instead of using the buyer's own money. It's like buying a toy with your friend's money and promising to pay them back later. The idea is that the company being bought will make enough money in the future to pay back the borrowed money and still make a profit.
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Definition: LBO stands for leveraged buyout. It is a type of buyout where a company is acquired using a significant amount of borrowed money, usually through loans or bonds. The assets of the company being acquired are often used as collateral for the borrowed funds. The goal of an LBO is to use the acquired company's assets to generate enough cash flow to pay off the debt used to acquire it, while also providing a return on investment for the buyers.
These examples illustrate how an LBO works and the types of companies that may be suitable for this type of buyout.